ATC151027: Report of the Select Committee on Cooperative Governance and Traditional Affairs On Loco Inspection on notice of Intervention issued in terms of section 139(1)(B) of the Constitution (1996) in Indaka Local Municipality, dated 27 October
REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON LOCO INSPECTION ON NOTICE OF INTERVENTION ISSUED IN TERMS OF SECTION 139(1)(b) OF THE CONSTITUTION (1996) IN INDAKA LOCAL MUNICIPALITY, DATED 27 OCTOBER 2015
1.1 On 03 August 2015, the MEC for Cooperative Governance and Traditional Affairs in KwaZulu-Natal tabled to the Office of the Chairperson of the National Council of Provinces (NCOP) a notice of intervention in terms of section 139(1)(b) of the Constitution at Indaka Local Municipality. Subsequent to the tabling, the Chairperson of the NCOP referred the notice of intervention in terms of Rule 101, to the Select Committee on Cooperative Governance and Traditional Affairs for consideration and report.
1.2 On the 21 October 2015, the Select Committee conducted loco inspection on the notice of intervention in terms of section 139(1)(b) of the Constitution in Indaka Local Municipality.
- Objectives of the Inspection in Loco
2.1 The objective of conducting the loco inspection was to consult and interact with the internal and external stakeholders of the Municipality in order to solicit their opinion with regard to the progress made in implementing the constitutional, procedural and substantive matters related to the of intervention in the Municipality, in terms of section 139(1)(b) of the Constitution.
- Composition of Delegation
3.1 The delegation of the Select Committee was composed of the following Members of Parliament and Officials: Hon J Mohapi, Free State (ANC); Hon L Nzimande, KwaZulu-Natal (ANC); Hon S Thobejane, Limpopo (ANC), Hon D Ximbi, Western Cape (ANC); Hon R Manopole, Northern Cape (ANC); Hon M Chetty, KwaZulu-Natal (DA); Hon T Mokwele, North West (EFF); Mr T Manele (Committee Secretary); Mr N Mfuku (Content Advisor); Mr B Mahlangeni (Committee Researcher); Mr N Mangweni (Committee Assistant) and Mr T Gubula (Parliamentary Media and Communication Officer).
- General Overview of Loco Inspection at Indaka Local Municipality
4.1 On 21 October 2015, the delegation of the Select Committee had interaction and consultative meeting with the internal and external stakeholders of the Municipality.
Interaction included the Department of Cooperative Governance and Traditional Affairs, the Mayor; Deputy Mayor, Speaker, Chief Whip, the Administrator and representatives of the South African Local Government Association, Organised Labour and Ward Committee Members.
- Opening and Welcoming by the Executive Mayor
5.1 The Executive Mayor informed the delegation of the Select Committee that the Municipality failed and disregarded the advice of the Department to follow legally prescribed procedures, when dealing with the disciplinary matters related to the conduct of senior managers in the Municipality.
5.2 The delegation was further informed that the municipal council had attempted to suspend the Municipal Manager without following due processes, a decision that was later overturned on June 2015 by the South African Local Government Bargaining Council at an arbitration hearing that the municipal council ignored to attend. The Mayor further informed the delegation that the Municipality also failed and disregarded the law and the advice of the Department of Cooperative Governance and Traditional Affairs, by persisting with the appointment of the Acting Municipal Manager who did not meet the legally prescribed minimum requirements.
- Briefing by Department of Cooperative Governance and Traditional Affairs
6.1 The Department briefed the delegation about the implementation of the constitutional, procedural and substantive matters related to the intervention in terms of section 139(1)(b) of the constitution. The presentation focused on reasons for intervention; decision of the Provincial Executive Committee; emerging issues, recovery plan; summary of progress report; back to basics and transitional matters for merging municipalities.
- Reasons for the Intervention
7.1 Subsequent to the termination of the section 139(1)(a) intervention in March 2015, the municipal council took decisions that were contrary to the law; refused or rejected advice, forcing the KwaZulu-Natal MEC for CoGTA to resort to the courts to force the municipality to comply with the law; took decisions that adversely compromised the legally prescribed processes in preparation for the merger between itself and the eMnambithi Local Municipality after the 2016 local government elections.
7.2 In April 2015, the Mayor was removed and replaced without following due processes, resulting in the Municipality having a Mayor who was not a member of the Executive Committee; The Executive Committee was thus not constituted proportionately as required in terms of section 43 of the Local Government: Municipal Structures Act, Act No.117 of 1998.
The municipal council refused advice from CoGTA officials in this regard, and the MEC had authorized that the illegal removal of the Mayor be challenged in court, which matter was still pending when the decision to intervene was taken. The decision was subsequently remedied by the municipal council after the intervention.
7.3 The Executive Committee and Portfolio Committees had become dysfunctional and were thus not able to discharge their duties of oversight on the administration. There were allegations of officials changing the minutes of Council after the meetings on at least two occasions, allegedly due to pressure from factions of councillors.
7.4 The first instance happened in February 2015 following the suspension of the Municipal Manager. The minutes were allegedly changed in respect of the suspension of the Municipal Manager to make it look like the council had in fact complied with the procedures to suspend the Municipal Manager. The second and more serious instance was after the approval of the 2015/16 budget where the Municipal Manager and some councillors alleged that the list of projects approved by council for implementation during the 2015/16 had, ex post facto, been altered. In July 2015 the Speaker failed to convene meetings of council, even when petitioned by the majority of councillors from all parties represented in council in terms of section 29 of the Municipal Structures Act, preferring instead to promote divisions and parallel meetings. There were allegations of abuse of supply chain management policies and regulations made by the Municipal Manager at a meeting with CoGTA officials, prior to his brutal murder.
7.5 There were allegations of failure by Indaka municipal councillors and officials to participate in the legally constituted Change Management Committee (CMC), which oversees the preparation for the merger with the eMnambithi Local Municipality. The Chief Financial Officer of the Municipality had advised CoGTA that he was unable to discharge his duties at the municipality due to threats he had received, and requested that CoGTA authorize for him to obtain security through the SAPS.
- Decision of the Provincial Executive Committee (PEC)
8.1 The PEC approved a provincial intervention in terms of section 139(1)(b) of the Constitution at the Indaka Local Municipality, authorise the MEC for CoGTA to appoint a ministerial representative with the following terms of reference:
8.1.1 Undertake all fiscal and financial management functions at the Municipality.
81.2 Undertake all steps prescribed in sections 54A and 56 of the Local Government: Municipal Systems Act, Act 32 of 2000 and associated Regulations.
8.1.3 Undertake all functions listed in section 51 of the Municipal Systems Act, as amended.
8.1.4 Undertake all Budget and Treasury Office functions and powers provided for in Chapter 9 of the Municipal Finance Management Act, Act No.56 of 2003, as amended, including becoming one of the signatories on the Municipality’s bank accounts.
8.1.5 Ensure the implementation of all governance systems and procedures, including oversight mechanisms.
8.1.6 Ensure implementation of findings of any forensic investigations undertaken by the municipality or the MEC in terms of section 106 of the Municipal Systems Act, 2000 or any other relevant legislation.
8.1.7 Undertake the functions referred to in section 67(1)(h) and Schedule 2 of the Municipal Systems Act, read with any other relevant legislative provisions dealing with disciplinary matters, including criminal and civil action.
8.1.8 Ratify all decisions taken by the Acting Municipal Manager and section 56 Managers in terms of delegated or original authority.
8.1.9 Prepare and implement a turn-around strategy for the Municipality approved by the municipal council and also implement a system to control and approve all expenditure.
8.1.10 Ensure implementation of financial systems, policies and procedures.
8.1.11 Ensure participation by the political and administrative leadership in the Change Management Committee activities.
8.1.12 Review the organizational structure of the Municipality.
9. Emerging Issues during the Intervention
9.1 Upon assuming duties at Indaka on 03 August 2015 the intervention team found further that the municipal council had failed to fulfill its obligation in terms of section 53 of the Systems Act, to define the specific role and area of responsibility of each political structure and political office bearers of the Municipality and of the Municipal Manager.
9.2 There was no internal capacity to produce Annual Financial Statement and to ensure that these were submitted timely to the Auditor General. There was slow spending on capital projects. This was at 54% for the 2014/15 financial year, and as at 3 August there was 0% spending on the capital budget for 2015/16. Council meetings were sabotaged: Two meetings (31 August & 29 September) were deliberately cancelled by the Speaker; divisions within Council have filtered down to staff and has compromised the administration; the municipal budget excluded a number of essential programs and unavoidable expenditures that exist in the municipal environment. Security remained a threat to the decision-making processes.
10. Recovery Plan
10.1 Part of the recovery plan included the instilling of the rule of law and strengthening discipline by reviewing standing rules and orders, conducting workshop code of conduct for councilors, facilitating the signing of declaration of interests by all councilors, facilitating the signing of declaration of interests by all members of staff, reducing acts of councillor interference with administration through enforcement of code of conduct and reporting lines.
10.2 Resuscitating governance structures and implementation of decisions by facilitating the correction of the composition of the Executive Committee, removal of the illegally elected Mayor and ensure legal election of the Mayor; guiding council meetings and rectifying decisions of council and reviewing all section 79 and 80 committees
10.3 Strengthening council oversight by ensuring full-functionality of the Executive Committee and all its portfolio committees, by creating a schedule of meetings for the full financial year and ensure that agendas are prepared and meetings are convened; reviewing terms of reference all portfolio committees; reviewing and conducting workshop on roles and responsibilities for governance structures, office bearers, Municipal Manager and other senior managers.
10.4 Increasing institutional capabilities and systems by reviewing the organogram and identify and fill all critical positions as per the approved Municipal Staff Recruitment Policy; facilitating the filling in of the Municipal Manager’s position; reviewing of Bid Committees, ensuring Declarations by Bid Committee Members; improving SCM Processes by reviewing the Database of Suppliers, introducing rotation of Suppliers, management of quotations and deviations, reviewing all current Contracts and ensuring and strengthening of the Performance Management Systems.
10.5 Enhancing communication with staff and build cohesion by convening monthly Local Labour Forum meetings and quarterly staff mass assemblies; introducing suggestions mechanism and facilitating team building sessions.
10.6 Implementing Anti-Corruption Framework by facilitating the finalization of all disciplinary matters; facilitating the implementation of all forensic investigations conducted and/or request an additional section 106 investigation; instituting all criminal cases and initiating recoveries.
10.7 Ensuring accurate billing and payment for services by facilitating and monitoring the involvement of Indaka in the process of updating of the valuation roll for the new Municipality; facilitating and monitoring the involvement of Indaka in the process of analysis of the effectiveness and selection of the best financial system for the new Municipality and the ring-fencing of conditional grants.
10.8 Providing free basic service by reviewing the Municipality’s indigent policy and align with Emnambithi/Ladysmith Local Municipality; reviewing indigent register for free basic electricity with Emnambithi/Ladysmith Local Municipality.
10.9 Improving fiscal and financial management functions by amending signatories on the bank account; finalizing the budget review initiated by the late Municipal Manager and improving expenditure control committee.
10.10 Improving operation clean audit by ensuring timely compilation and submission of the AFS to the Auditor-General; ensuring timely compilation and submission of draft annual report to the Auditor-General; resolving all audit queries; eensuring implementation of approved audit plan; mmonthly monitoring and updating GRAP compliant Asset Register; ensuring compilation of appropriate monthly financial reports and ensuring submission to Acting Municipal Manager and Mayor.
11. Presentation on Progress Report on Intervention
11.1 The Administrator presented the status report on intervention issued in terms of section 139(1)(b) of the Constitution. The presentation focused on strategic objectives of instilling rule of law and strengthening discipline; resuscitation of governance structures; ensuring smooth merger of Indaka and eMnambithi/Ladysmith Municipalities; increase institutional capabilities and system; enhancing communication with staff and build cohesion; implementing anticorruption; planning and budgeting; ensure accurate billing system; provision of basic service; facilitation of delivery of service; stimulation of local economic development; improving internal control environment
12. Instilling the Rule of Law and Strengthening Discipline
12.1 This strategic objective includes reviewing and updating the standing rules; facilitating the signing of declaration of interests by all councillors and staff; reducing acts of councillors’ interference in the administration.
13. Resuscitating Governance Structures
13.1 The focus is about the facilitating the correction of the membership of the executive committee; removal of the illegally elected Mayor and re-instatement of the Mayor.
14. Ensuring Smooth Merger of the Municipality
14.1 This strategic objective includes the participation of the municipality in change management meetings.
15. Increase Institutional Capabilities and Systems
15.1 This strategic objective includes the facilitation of the filling of the position of the Municipal Manager; improving the supply chain management process; reviewing the bid committee; strengthening of performance management systems; review database of suppliers and management of quotations.
16. Enhancing Communication and Building Cohesion
16.1 This strategic objective includes resuscitation of the Local Labour Forum; introduction of suggestion systems and facilitation of team building.
17. Implementation of Anti-corruption Framework
17.1 This strategic objective includes the finalization of all disciplinary matters; implementation of all forensic investigations conducted; institute criminal cases and initiate recovery
18. Improving Planning and Budgeting
18.1 The focus is about is about the compilation, adoption and implementation of the Integrated Development Plan; compilation and adoption of the budget.
19. Provision of Free Basic Services
19.1 This strategic objective includes the review of indigent policy and alignment with Ladysmith Municipality; review of the indigent register for free basic electricity.
20. Improving the Fiscal and Financial Management Functions
20.1 The focus is about the amendment of signatories on the bank account; finalization of the budget review and formation of the expenditure committee.
21. Facilitation of Delivery of Services
21.1 This strategic objective includes compilation and implementation of maintenance plan; commencement of rural road rehabilitation programme; refurbishment of community halls; ensuring the completion of the 2014/15 projects and implementation of all capital projects budgeted for 2015/16 and attainment of the expenditure of Municipal Investment Grant.
22. Opinion of African National Congress
22.1 The African National Congress welcomed the intervention issued in terms of section 139(1)(b) of the Constitution.
23. Opinion of Inkatha Freedom Party
23.1 The Inkatha Freedom Party supported the intervention and appealed that the councillors should work together. The party also alleged that the Mayor was interfering with the administration of the Municipality.
24. Opinion of National Freedom Party
24.1 The National Freedom Party supported the intervention, as it will restore stability in the Municipality and enables service delivery.
25. Opinion of South African Local Government Association
25.1 The South African Local Government Association welcomed the intervention issued in terms of section 139(1)(b) of the Constitution.
26. Opinion of Ward Committee Members
26.1 The Ward Committee Members requested that the infighting in the Municipality should stop and the councillors should work together, especially the Troika. CoGTA should assist in bringing unity in the Municipality and they were hopeful that the intervention will provide the necessary turn around.
27. Scelukukhanya Home Based Care: NGO
27.1 The NGO remarked that there were internal conflicts that affected the citizenship and hope the intervention will speed up service delivery. There were areas where people were not receiving refuse removal services because of the infighting in the Municipality.
28. Opinion of Organized Labour
28.1 The South African Municipal Workers Union (SAMWU) welcomed the intervention and were hoping that the merger with eMnambithi Municipality will not result job losses. The Independent Municipal and AIlied Trade Union (IMATU) supported the intervention, as it has already yielded good results in the past. For the 2013/14 financial year, the Municipality moved from a disclaimer to an unqualified audit opinion.
29. Select Committee Observations
29.1 The Select Committee condemned with the strongest terms the killing of the Indaka Municipal Manager and called upon any person with information on the circumstances that led to this brutal crime to approach the law enforcement agencies.
29.2 Political instability in the administration of Municipality is a particularly serious problem because of its coalition council. Coalitions have led to frequent changes in local governance and to constant changes in political and administrative leadership. Due to the fluidity in local government, the politics of the day have become synonymous with back-stabbing, secret agreements and arrangements between politicians and political parties wishing to align themselves in such a way as to gain control of the councils. A municipality is required by the Constitution to structure and manage its administration and budgets, budgeting and planning processes so as to give priority to the basic needs of the community and to promote the social and economic development of the community.
29.3 The delegation of the Select Committee has observed that some reasons for intervening at Indaka Local Municipality in terms of section 139(1)(b) of the Constitution, included the Municipality failure to follow legally prescribed procedure when dealing with the disciplinary matters related to the conduct of senior managers, suspension of the Municipal Manager without following due processes, the appointment of the Acting Municipal Manager who did not meet the legally prescribed minimum requirements.
29.4 The Departments has appointed service providers to assist CMC municipalities with the drafting of organograms and the process is almost finalized. The MPRA Unit is assisting with the rationalization of the valuation roll for the merging municipalities. The Department is assisting with the rationalization of municipal by-laws. The Department is assisting with the Budget and IDP processes for merging municipalities. In addition, the Department is also assisting with the drafting of job descriptions.
30.1 Having conducted the oversight visit and interacted with the internal and external stakeholders of the Municipality, the Select Committee recommends to the NCOP as follows:
30.1.1 The NCOP approves the intervention in Indaka Local Municipality in terms of section 139(1)(b) of the Constitution.
30.1.2.The South African Local Government Association in collaboration with the Department of Cooperative Governance and Traditional Affairs should spearhead and expedite the Capacity Building Programme of Municipal Councillors and Officials
30.1.3 The Office of the Mayor should have dedicated budget and establish youth and women desks to deal with programmes related to youth and women within the Indaka community
30.1.2 The KwaZulu-Natal MEC for Cooperative Governance and Traditional Affairs should table quarterly progress reports to the NCOP and the Provincial Legislature on the status of the intervention in the Municipality, including the termination of the intervention report.
Report to be considered.
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